Basic Analytical Techniques

In analyzing cost performance, managers must initially consider the issue of scope. Is the analysis for a single responsibility center or multiple centers? For a single period or a number of periods? If multiple responsibility centers are being examined, how can managers compensate for differences in their sizes? Several techniques have been developed to analyze the relationships in a set of financial statements at a single point in time and the trends in these relationships over multiple periods. Cross-sectional techniques focus on the first of these, and time-series techniques look at the latter. Although this text focuses on cost performance, these methods also can be used for revenue-related analyses.